You are here

Working with reviewers and auditors for tier 2 and 3 associations

Incorporated associations who fall into Tier 2 and 3 for financial reporting purposes have specific responsibilities under the Associations Incorporation Act 2015 (the Act) with respect to appointing, removing and providing information to their reviewer or auditor.

NOTE

An incorporated association is a tier 2 association if its annual revenue is greater than $250,000 but less than $1,000,000.

Appointing the auditor or reviewer

Legal requirements

87. Appointment of reviewer or auditor

Section 87(1) of the Act requires the reviewer or auditor to be appointed by a resolution of the members at a general meeting of the Association.

A reviewer or auditor appointed at a general meeting holds office until the reviewer or auditor

dies; or

becomes an insolvent under administration as the term is defined in the Corporations Act; or

ceases to be qualified for appointment as provided by section 88(2); or

is removed from office under section 89; or

resigns from office under subsection (5). (s87(3))

In a situation where the association is required to have its accounts reviewed or audited and there has been no appointment made by the members, the committee may make the necessary appointment so the reporting requirements of the Act can be met (s87(2)).

Under these circumstances the reviewer or auditor will hold office until their report has been presented for consideration at the association’s AGM (s87(4)).

Section 87 of the Act also states:

(5) A reviewer or auditor of an incorporated association may, by notice in writing given to the association, resign as reviewer or auditor of the association.

(6) An incorporated association must, within 14 days after being given a notice of resignation by a reviewer or auditor, lodge with the Commissioner notice of the resignation in the approved form.

Penalty: a fine of $1 000.

88. Qualifications for appointment

An incorporated association or management committee must not appoint a person as the reviewer or auditor for the association if the person is not qualified for appointment.

WHAT TO DO

Before the association appoints the reviewer or auditor make sure they meet the qualification requirements under the Act.

For reviewers - a review must be conducted by an independent person who is:

a member of Chartered Accountants Australia and New Zealand (CA or FCA), CPA Australia (CPA or FCPA) or Institute of Public Accountants (MIPA or FIPA);

a registered company auditor; or

approved by the Commissioner.

For auditors - an audit must be conducted by an independent person who is:

a member of Chartered Accountants Australia and New Zealand (CA or FCA) who holds a current Certificate of Public Practice; or

a member of CPA Australia (CPA or FCPA) or Institute of Public Accountants (MIPA or FIPA) who holds a Public Practice Certificate; or

a registered company auditor; or

approved by the Commissioner.

If you are unsure whether the qualifications or affiliations are up to date the association can always make enquiries with the relevant peak organisation before engaging the auditor or reviewer.

The association should consider whether the services of the auditor or reviewer will be required on a regular basis or only for the purpose of reviewing or auditing the report to be presented at the AGM.

If the association wants to engage the regular services of the auditor or reviewer arrangements should be made for a general meeting to be called and the appointment voted on by the membership.

In the event the auditor or reviewer resigns ensure Consumer Protection is notified within 14 days. The association should submit a Notification of resignation of auditor or reviewer form.

Rights to receive information

LEGAL REQUIREMENTS

85. Information and assistance

An officer of an incorporated association must allow a reviewer or auditor of the association access at all reasonable times to the books of the association.
Penalty: a fine of $2 750.

A reviewer or auditor of an incorporated association may require an officer of the association to give the reviewer or auditor information, explanations or other assistance for the purposes of the review or audit.

A requirement under subsection (2) must be a reasonable one.

An officer of an incorporated association must comply with a requirement under subsection (2).
Penalty: a fine of $2 750.

86. Right to attend general meeting and be heard

A reviewer or auditor of an incorporated association, or an agent of a reviewer or auditor authorised by the reviewer or auditor in writing for the purpose, is entitled —

to receive all notices of and other communications relating to any general meeting of the association a member is entitled to receive; and

to attend any general meeting of the association; and

to be heard at any general meeting the reviewer or auditor attends on any part of the business of the meeting that concerns the functions of the reviewer or auditor under this Part.

Subsection (1) applies despite the fact the reviewer or auditor retires at the meeting or a resolution to remove the reviewer or auditor from office is passed at the meeting.

An incorporated association must ensure a reviewer or auditor is afforded the rights conferred by this section.
Penalty: a fine of $2 750.

WHAT TO DO

Provide the auditor or reviewer with the details for an appropriate committee member or officer they can contact if they require access to particular records or explanations about the Association’s financial records.

Make sure the association’s committee members and officers are made aware the auditor or reviewer is entitled to request information and it should be provided to them.

When a general meeting of the association is called make sure copies of the notices and information provided to the members are also sent to the auditor or reviewer.

Removing the auditor or reviewer

Legal requirements

89. Removal of reviewer or auditor by resolution

A reviewer or auditor of an incorporated association may be removed from office by resolution at a general meeting of the association in accordance with this section but not otherwise.

Written notice of an intention to move a resolution referred to in subsection (1) must be given to every member of the association at least two months before the general meeting is to be held.

The notice must state in full the proposed resolution.

As soon as possible after being given the notice of the resolution, the committee of management of the association must —

give a copy of the notice to the reviewer or auditor; and

lodge a copy of the notice with the Commissioner.

Penalty: a fine of $1 000.

90. Reviewer or auditor may make representations

A reviewer or auditor of an incorporated association who receives a notice from the association under section 89(4)(a) may, within 30 days after receiving the notice, make a written representation, not exceeding a reasonable length, to the management committee of the incorporated association.

Subject to section 91, if the reviewer or auditor makes a representation under subsection

(1), a resolution proposing the reviewer’s or auditor’s removal is of no effect unless —

the management committee gives a copy of the representation to all members of the association at least 7 days before the meeting at which the resolution is to be considered; and

the reviewer or auditor is allowed to attend the meeting and address the members present before the vote on the resolution.

A document required to be given to a member of an incorporated association under this section may be given —

personally; or

by post; or

by any other means authorised under the rules of the association.

All costs associated with giving a document to the members of an incorporated association under this section are to be borne by the association

If the association does not wish to give members copies of the information submitted by the reviewer or auditor referred to in s90(2) the committee can apply to the Commissioner for Consumer Protection to request an exemption (s91).

What to do

To remove an appointed reviewer or auditor from office the association must call a general meeting and a resolution must be passed by the members.

The notice for this resolution must be sent to all members at least two months before the date of the general meeting and must include the full details of the resolution will be proposed.

A copy of this notice must:

be given to the auditor or reviewer; and

lodged with the Commissioner for Consumer Protection. The association should submit a Notification of resolution to remove auditor or reviewer form.

The reviewer or auditor has 30 days from the date they receive the notice to make a written submission to the management committee.

If the reviewer or auditor makes a submission, the committee must give a copy of the document to all members at least 7 days before the meeting is to be held. The reviewer or auditor will also have the right to attend the meeting and address the membership before the vote takes place.

If the committee does not wish to provide copies of the submission to the members or allow the auditor or reviewer to attend the meeting or speak, it must make an application to the Commissioner for an exemption.
The association should submit an Application to exempt requirement to provide auditor or reviewer’s representation along with the prescribed fee.NOTE: If the association does not obtain an exemption from the Commissioner and fails to provide the reviewer or auditor’s submission to the members, the resolution proposing their removal will have no effect.

The meeting should be conducted in accordance with the meeting procedures in the association’s rules and votes cast by eligible members.